In practice, as an agency specializing in China-related debt collection, we have noticed that small and medium-sized enterprises (SMEs) are often more likely to get into situations where they are owed money by their Chinese partners.
What do you do as a creditor if you have a winning judgment against your debtor in a country other than the one where the debtor has assets or is located?
Finality matters. In 2020, Wuxi Intermediate People’s Court of China dismissed an application for enforcing a US judgment, due to the lack of finality, in Wuxi Luoshe Printing & Dyeing Co. Ltd. v. Anshan Li et al. (2017).
Can I sue Chinese companies in Spain and then enforce an Spanish judgment in China?
If you fail to collect your debt at the amicable collection stage, the next step is to initiate legal proceedings.
Yes, the Chinese court in Wenzhou, Zhejiang Province, enforced an Italian judgment in 2021, upholding the claim of the judgment creditor’s successor (Ye Aiwen v. Chen Tihu (2019)).
Firstly, these are actions that you can take on your own in the event of a late delivery, in case you want to try to push the supplier to deliver or terminate the deal yourself before seeking professional advice.
Can I ask a Chinese court to order the other party to pay for my attorney’s fees?
Imagine if you buy goods from a Chinese supplier, but the deal fails and the Chinese supplier should return you the advance payment.
Under the huge trade scale, there are, inevitably, considerable purchase payment or advance payment defaults.
Compared with debtors in your own country, when debtors in China do not pay, you will encounter many different challenges and consequences.
Problems faced by trade dispute settlement are uncertain and therefore more complex, while debt collection only concerns the collection of a specific undisputed debt.
International debt collection can be a complex, drawn-out process, particularly when you don’t understand Chinese, can’t come to China, and know nothing about China’s legal and judicial system.
Before bringing a lawsuit, you could first consider negotiation, complaint, and debt collection.
Collecting debts from international clients is hard enough, but the process becomes even harder when trying to collect a debt from a Chinese business partner whose culture and language are completely different from yours.
The 2021 Conference Summary enables an ever greater number of foreign judgments to be enforced in China, by making substantial improvements from both the “threshold” and “criteria”.
If you get a winning judgment or arbitral award, and the property that can be used to repay debts is located in China, then the first thing you need to know is the enforcement mechanism in the Chinese courts.
You can claim debt recovery from its shareholders. Normally, due to the very nature of companies (legal persons), it is very difficult for you to claim debt recovery from a Chinese company’s shareholders. Once the company is canceled, however, you will have opportunities to do so.
Most of the foreign arbitral awards are enforceable in China. In 2019, the foreign arbitral awards are recognized and enforced, with a success rate of 87.5%. In 2018, the success rate is 87.5% too.
